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Kirin Group Business Approach for 2007Taking a proactive, fast-moving stance in Kirin’s centenary year to mark the first year of
KV2015 Stage I and initiate a quantum leap in growth
KIRIN BREWERY COMPANY, LIMITEDJanuary 10, 2007
January 10, 2007 2©2007 KIRIN BREWERY COMPANY, LIMITED
1. 2007: Kirin Group Strategy – Basic Groupwide Policies
2007 2007 Kirin Group StrategyKirin Group Strategy
2010 Mid-term Plan(2010-2012)
2013 Mid-term Plan(2013-2015)
KV2015 KV2015 ((LongLong--term business framework)term business framework)
2007 2007 MidMid--term Planterm Plan(2007(2007--2009)2009)
KV2015 Stage I KV2015 Stage I ==Plan to rapidly realize the longPlan to rapidly realize the long--term goals of KV2015term goals of KV2015
2007 marks Kirin’s centenary and the start of KV2015 Stage I. We intend to reform our corporate structure, pursue initiatives aimed at raising KIRIN brand value and maximize corporate value to initiate a quantum leap in growth.
200720072007
Build further customer Build further customer support for Kirinsupport for Kirin’’s s domestic alcohol domestic alcohol
businessbusiness
Accelerate initiatives in the overseas Accelerate initiatives in the overseas alcohol, pharmaceutical and health and alcohol, pharmaceutical and health and
functional foods businesses and functional foods businesses and pursue a comprehensive Group pursue a comprehensive Group
beverages strategybeverages strategy
Implement CSR Implement CSR GroupwideGroupwide
January 10, 2007 3©2007 KIRIN BREWERY COMPANY, LIMITED
Focus on Asia and Oceania. In the growing Chinese market expand Focus on Asia and Oceania. In the growing Chinese market expand business business in each area and consider new partnerships. Develop business in in each area and consider new partnerships. Develop business in ASEAN ASEAN countries.countries.
Pursue autonomous growth in the three
target regions of China
Pursue autonomous Pursue autonomous growth in the three growth in the three
target regions of Chinatarget regions of China
● Yangtze River Delta: Start production of Kirin brands at HangzhouQiandaohu Brewery Co.
● Pearl River Delta: Start production at new Kirin (Zhuhai) brewery● Three Northeast provinces: Expand sales of Zui Qilin
Expand Groupsynergies
Expand GroupExpand Groupsynergiessynergies
● Implement technology exchange between Group companies andtraining to develop local staff
● Coordinate with Lion Nathan and San Miguel● Reduce raw material costs through joint procurement, consider
item expansion for joint procurement
Grow sales volumeGrow sales volumeGrow sales volume2007 Overseas beer sales targets● KIRIN brand: 54,496 KL(+28.3%)● Non-KIRIN brand: 1,456,964 KL(+5.6%)
2. 2007: Kirin Group Strategy – Overseas alcohol business
Overseas alcohol businessOverseas alcohol business
January 10, 2007 4©2007 KIRIN BREWERY COMPANY, LIMITED
Accelerate Kirin Accelerate Kirin pharmapharma growth by expanding share in renal treatments, growth by expanding share in renal treatments, strengthening development pipeline and pursuing global growth. Astrengthening development pipeline and pursuing global growth. Aim to im to become a global specialist become a global specialist pharmapharma company.company.
Maintain and strengthenbusiness base
Maintain and strengthenMaintain and strengthenbusiness basebusiness base
●Launch KRN321●Seek approval of KRN1493●Create 500-strong MR team
Create global products
Create global Create global productsproducts
●Consider business tie- ups●Pursue licensing
Pursue overseas growth
Pursue overseas Pursue overseas growthgrowth
●Apply for drug approvals in Vietnam, Indonesia, the Philippines
●Start U.S. development
Strengthen pipeline and operationsStrengthen pipeline and operations
Penetrate ASEAN and U.S. marketsPenetrate ASEAN and U.S. markets
2007 initiatives2007 2007 initiativesinitiatives
Further strengthen areas of Further strengthen areas of core competence (Renal/Cancer)core competence (Renal/Cancer)
3. 2007: Kirin Group Strategy – Pharmaceutical business
Pharmaceutical businessPharmaceutical business
January 10, 2007 5©2007 KIRIN BREWERY COMPANY, LIMITED
Aim for sales of Aim for sales of ¥¥20bn in 2009. Strengthen the Health/Functional Foods 20bn in 2009. Strengthen the Health/Functional Foods Business as the GroupBusiness as the Group’’s fourth pillar, centered on Kirin Yakult s fourth pillar, centered on Kirin Yakult NextStageNextStage Co. Co.
Kirin YakultNextStage Co.Kirin YakultKirin Yakult
NextStageNextStage Co.Co.● Inherit core businesses of Kirin Well-Foods from 1/1/07● Develop and sell follow-up products to BBcube
Takeda-Kirin Foods Corp.
TakedaTakeda--Kirin Kirin Foods Corp.Foods Corp.
Kirin AgribioKirin Kirin AgribioAgribio
● To become 100% Kirin subsidiary from April 1, 2007—Kirin Food Tech● In 2007 start full-scale production at new Indonesian factory
● Focus resources on seedling business● Establish Kirin Agribio Floricultural Development Center (provisional
name) in 2007
4. 2007: Kirin Group Strategy – Health/Functional foods; Other
Health/Functional Foods BusinessHealth/Functional Foods Business
Seasonings/Seasonings/AgribioAgribio BusinessesBusinesses
January 10, 2007 6©2007 KIRIN BREWERY COMPANY, LIMITED
Kirin Group CSR ActivitiesKirin Group CSR ActivitiesKirin Group CSR Activities
Further strengthening compliance and risk management Groupwide● Formulated Group compliance guidelines● Groupwide risk management as the basis
of internal controls
Food safety and securityStrengthen quality management
and controlImprove information disclosure
Sports sponsorshipSupport for Japan’s national
soccer and Olympics teams
Responsibilities as an alcohol beverage company
Promoting food cultureConducting a broad range of study and research, providing information on food and lifestyle cultureInitiatives in beer and tea culture
Environmental initiativesFurther reductions in CO2 emissions Preserving water purity
STOP!Underage drinking prevention logo
Ecojiro-Kirin’s mascot for environmental eactivities
Increased trust by society
Kirin Group activities
●Renewed contract as sponsor of Japan’s national soccer team
●Formulate basic Group environmental policy
●Team Ecojiro activities
5. 2007: Kirin Group Strategy – CSR
Implementing CSRImplementing CSR GroupwideGroupwide
Promote responsible drinking Help prevent underage drinking, reduce drunk driving, warnings on drinking during pregnancy
January 10, 2007 7©2007 KIRIN BREWERY COMPANY, LIMITED
8
2007 – Domestic alcohol business strategy~Meeting needs by staying closest to our customers~
January 10, 2007
January 10, 2007 9©2007 KIRIN BREWERY COMPANY, LIMITED
1. Review of 2006 (Overall market)
■ Beer (-2% approx.) ・Fourth consecutive year of single digit decline ・Premium segment grew by around 5 to 7%
■ Happo-shu (-10% approx.) ・Strong support in home-use market ・Market supported leading brands and
distinctive brands
■ New genre (+22% approx.) ・Further market growth. Now around 20% of
combined category
■ Chu-hi (+1% approx.) ・Growth in this market slowed
Slight decline in combined beer, Slight decline in combined beer, happohappo--shushu,,new genre market (new genre market (--1% approx.)1% approx.)
Affected by declining/aging population, diversifying tastes, tax revisions
Combined beer + happo-shu +new genre market
Combined beer + Combined beer + happohappo--shushu ++new genre marketnew genre market
Kirin estimates; Unit = 10,000 cases
0
10,000
20,000
30,000
40,000
50,000
60,000
2000 2001 2002 2003 2004 2005 2006
New genre
Happo-shu
Beer
January 10, 2007 10©2007 KIRIN BREWERY COMPANY, LIMITED
● ● Strongly outperformed the industry; 2Strongly outperformed the industry; 2ndnd consecutive year of growthconsecutive year of growth● ● Further strong performance from Further strong performance from Kirin Kirin NodogoshiNodogoshi ofof +39.4%; achieved new +39.4%; achieved new
genre sales targetsgenre sales targets● ● Strongly outperformed industry in Strongly outperformed industry in happohappo--shushu with +3.5 % growth, driven bywith +3.5 % growth, driven by
hit product hit product Kirin Kirin EnjukuEnjuku and growth inand growth in TanreiTanrei Green LabelGreen Label
Key pointsKey pointsKey points
Total beer + Total beer + happohappo--shushu + new genre sales: + new genre sales: 187.1 million cases 187.1 million cases ((+4.8%+4.8%))
■■ Beer: 79.70 Beer: 79.70 million casesmillion cases ((--5.6%)5.6%)
■ ■ HappoHappo--shushu: 68.50 : 68.50 million casesmillion cases (+3.5%)(+3.5%)
■ ■ New genre: 38.90 New genre: 38.90 million casesmillion cases (+39.4%)(+39.4%)
■ ■ ChuChu--hi: 37.50 hi: 37.50 million casesmillion cases (+3.9%)(+3.9%)
Kirin: Total sales volume of beer + happo-shu + new genre
Kirin: Total sales volume of beer + Kirin: Total sales volume of beer + happohappo--shushu + new genre+ new genre
*Figures for beer, happo-shu and new genre represent cases of large bottles (I case = 12.66 liters). Figures for chu-hi represent cases of 250ml cans (I case = 6 liters)
Unit= 10,000 cases
2. Review of 2006 (Kirin)
17,200
17,400
17,600
17,800
18,000
18,200
18,400
18,600
18,800
2004 2005 2006
January 10, 2007 11©2007 KIRIN BREWERY COMPANY, LIMITED
3. 2007: Domestic Alcohol Business—Basic strategy
Marketing focus on the diversity of customer needsMarketing focus on the diversity of customer needs
5 + 15 + 1 basic strategic issuesbasic strategic issues
……..and become the company most supported by and become the company most supported by customerscustomers
Plus One: Reform corporate organization and culture
55..Enhance Enhance CSRCSR
22..No. 1 in No. 1 in beer drinks beer drinks
(beer, (beer, happohappo--shushu, , new genre)new genre)
33..Expand Expand RTD, RTD,
shochushochuand wineand wine
44..Improve Improve costcost--
competitcompetit--ivenessiveness
1.Establish and enhance customer-focused marketing model
January 10, 2007 12©2007 KIRIN BREWERY COMPANY, LIMITED
4. 2007 Kirin beer sales targets
BeerBeer83.40m cases (+4.6%)83.40m cases (+4.6%)
HappoHappo--shushu70.90m cases (+3.5%)70.90m cases (+3.5%)
New genreNew genre43.10m cases (+10.8%)43.10m cases (+10.8%)
ChuChu--hihi34.6m cases (34.6m cases (--7.7%)7.7%)
Targeting a Targeting a large increase in sales of 5.6%large increase in sales of 5.6% vs. forecast industry decline of around 1vs. forecast industry decline of around 1%%Aiming for turnaround in beer. Launching next generation new proAiming for turnaround in beer. Launching next generation new product,duct,strengthening existing and premium brandsstrengthening existing and premium brandsHappoHappo--shushu——Sustaining No. 1 positionSustaining No. 1 position through leading brands and distinctly through leading brands and distinctly individual brandsindividual brandsNew genreNew genre——Reinforcing No. 1 position by Reinforcing No. 1 position by strengthening and renewing brandsstrengthening and renewing brands
Key pointsKey Key
pointspoints
Target total beer + Target total beer + happohappo--shushu + new genre sales + new genre sales of 197.5 million cases (+5.6%)of 197.5 million cases (+5.6%)
*Figures for beer, happo-shu and new genre represent cases of large bottles (I case =12.66 liters). Figures for chu-hi represent cases of 250ml cans (I case = 6 liters)
January 10, 2007 13©2007 KIRIN BREWERY COMPANY, LIMITED
5. 2007 Domestic alcohol business– Product strategy (Beer, happo-shu, new genre)
①In happo-shu and new genre, meet customer needs for a balance of quality and taste and strengthen Kirin’s core value proposition.
② In the beer category, where consumers increasingly expect products to reflect their different lifestyles and tastes, strengthen provision of Kirin-style value-added proposals.
③Lead the market by encouraging differentiation of customer lifestyle (health) and taste needs in the happo-shu market
①In happo-shu and new genre, meet customer needs for a balance of quality and taste and strengthen Kirin’s core value proposition.
② In the beer category, where consumers increasingly expect products to reflect their different lifestyles and tastes, strengthen provision of Kirin-style value-added proposals.
③Lead the market by encouraging differentiation of customer lifestyle (health) and taste needs in the happo-shu market
New
リニューアル
リニューアル
新広告キャンペーン
No.1
No.1
Beer
Happo-shu
New genre
Dem
and
for b
alan
ce o
f qua
lity
and
pric
eLifestyle and taste preferences
Renewal
Renewal and newadvertisingcampaign
Health conscious Taste conscious
Enhance loyalty Refine image
Full yearof can sales
Refine image+new products
New product
Position ofprevious stapleproducts
January 10, 2007 14©2007 KIRIN BREWERY COMPANY, LIMITED
Demand for fashion and modernity in alcoholDemand for fashion and modernity in alcohol
Lifestyle demand for lightness and sw
eetnessLifestyle dem
and for lightness and sweetness
Bottled RTD zone—favorite tastes, ingredients
Beer beverages
Standard zone (refreshing, healthy)
Shin Lu Shin Lu ChuChu
Two DogsTwo Dogs
HyoketsuHyoketsuHayazumiHayazumi(50% less(50% less
sugar)sugar)
● Strengthen the position of Hyoketsu as the axis of the standard zone and boost new areas to meet you new preferences.
● Link with Mercian.● Introduce open pricing and new voluntary guidelines.
● Strengthen the position of Hyoketsu as the axis of the standard zone and boost new areas to meet you new preferences.
● Link with Mercian.● Introduce open pricing and new voluntary guidelines.
Mercian products
HyoketsuHyoketsu StandardStandard
Lifestyle performance
zone(relaxation, openness)
HyoketsuHyoketsuPremiumPremium
Sweet taste zoneSweet taste zone((sweetness, variety)sweetness, variety)
6. 2007 Domestic alcohol business– Product strategy (RTDs)
January 10, 2007 15©2007 KIRIN BREWERY COMPANY, LIMITED
Standard rangeB type/Major products
Premium rangeB type/
Regional specialties
Low-priced rangeMixed/A type
Shochu Wine SpiritsMercian product lineup+ Kirin product lineup
Aim for categoryAim for categoryleadershipleadership
Marketing based on price bandsMarketing based on price bands
Strengthen market presence around three core brands
Chivas RegalFuji-SanrokuFour Roses
…and further developbrands in the spirits and liquor markets
● Kirin + Mercian = Creation of a new product portfolio● Strengthen comprehensive alcohol business
● Kirin + Mercian = Creation of a new product portfolio● Strengthen comprehensive alcohol business
● Concentrate resources● Enhance comprehensive
alcohol business
● Concentrate resources● Enhance comprehensive
alcohol business
MercianproductsMercianproducts
7. 2007 Domestic alcohol business–Product strategy (shochu, wine, spirits)
January 10, 2007 16©2007 KIRIN BREWERY COMPANY, LIMITED
8. 2007 Domestic alcohol business—Sales strategy
Closest to our customersClosest to our customersClosest to our customers
Further promote value marketingFurther promote value marketing
● Match proposals to diverse customer scenarios
● Promote fair trading based on a cost-plus mindset
Realize Realize ‘‘Impressive qualityImpressive quality’’
● Cooperation with Kirin top ranked outlets, Kirin Manten Nama No Mise
●Stronger ties with KCS
Enhance Enhance Team Team KirinKirin
● Factories, distribution and sales divisions each to implement ‘close to the customer’ activities
● Sales approach tailored closely to each region
Form bonds Form bonds with customerswith customers
● Implement centenary initiatives
● Undertake soccer-related activities
Note: As of end Nov. there were 1,700 Kirin top-ranked Outlets, Kirin Manten Nama No Mise.
Note: As of end Nov. there were 1,700 Kirin top-ranked Outlets, Kirin Manten Nama No Mise.
January 10, 2007 17©2007 KIRIN BREWERY COMPANY, LIMITED
9. 2007—Enhancing Kirin’s production base
Hokuriku Plant (Medium/large volume plant)• Main plant for Hokuriku region• Insourcing of soft drinks production Expand brewery capacity
Tochigi Plant (Small volume, multi-product)• Chilled, etc., small volume production• Commence RTD production
Fukuoka Plant (Medium/large volume plant)•Main plant for Kyushu region•Completed renewal in Dec. 2006
Toride Plant (Medium/large volume)Main plant for Tokyo metropolitan regionExpand brewery capacity Increase canning line capacity
Sendai Plant (Medium/large volume)• Main plant for Tohoku region• Expand brewery capacity
Chitose Plant (Medium/large volume plant)• Main plant for Hokkaido region
Yokohama Plant (Medium/large volume)Main plant for Tokyo metropolitan regionExpand brewery capacity
Nagoya Plant (Medium/large volume plant)• Main plant for Tokai regionExpand brewery capacityIncrease canning line capacity
Shiga Plant (Small volume, multi-product plant)• Chilled, etc., small volume production• Insourcing of soft drinks production
Kobe Plant (Medium/large volume plant)Main plant for Kansai regionExpand brewery capacity
Okayama Plant (Medium/large volume plant)• Main plant for Chugoku/Shikoku regionExpand brewery capacity
Brewing research & Packaging research & Product development research
Expand pilot plant
●Create an efficient manufacturing organizationwith two factory types nationwide
Medium/Large volume plant
Small volume, multi-product plant
●Enhance stable product supply• Expand brewery capacity (Sendai, Toride, Yokohama, Nagoya,
Hokuriku, Kobe, Okayama)
• Increase canning line capacity (Toride, Nagoya)
• Enhance personnel foundations (Increase recruitment, improve staff training)
●Strengthen new product development and production
・Expand brewing research pilot plant・Expand domain of core technology as comprehensive
alcohol Group (technology exchange with Mercian)
January 10, 2007 18©2007 KIRIN BREWERY COMPANY, LIMITED
10. 2006 sales volumes and 2007 targets
Kirin 2006 actual % change
Beer -5.6%+3.5%
New genre 3,890 +39.4% 4,310 +10.8%Beer+ Happo-shu+ New genre 18,710 +4.8% 19,750 +5.6%
Chu-hi total 3,750 +3.9% 3,460 -7.7%
2007 target %change
Happo-shu7,9706,850
+4.6%+3.5%
8,3407,090
Industry (four companies) 2006 estimate % changeBeer -2% approx.
-10% approx.New genre +22% approx. +6% approx.
Beer+ Happo-shu+ New genre -1% approx. -1% approx.Chu-hi total +1% approx. +2% approx.
2007 forecast % change
Happo-shu-2% approx.-4% approx.
★Lager brands total 3,500 -10.9% 2,890 -17.4%
Lager 2,810 -9.9% 2,370 -15.7%
Classic Lager 690 -13.8% 520 -24.6%★Ichiban Shibori total 4,020 -3.4% 4,050 +0.7% Ichiban Shibori 3,910 -4.2% 3,840 -1.8%★Kirin The Gold - - 800 -
★Bottled chilled beer total 68 +70.0% 142 +108.8%
★Nodogoshi (draft) 3,890 +39.4% 4,310 +10.8%
★Tanrei brand total 5,770 -7.4% 5,970 +3.5% Tanrei (draft) 3,740 -13.2% 3,840 +2.7% Tanrei Green Label 1,800 +7.8% Tanrei Alpha -4.0%
-
+2.2%
★Enjuku brand total
1,900 +5.6%
★Hyoketsu total
240
900
3,680
±0.0%+14.4%
-9.5%
240
1,030
3,330
Unit: 10,000 cases
Unit: 10,000 cases
Industry forecasts (four main companies) are as estimated by Kirin
Industry forecasts (four main companies) are as estimated by Kirin
*Figures for beer, happo-shu and new genre represent cases of large bottles (I case =12.66 liters). Figures for chu-hi represent cases of 250ml cans (I case = 6 liters)
January 10, 2007 19©2007 KIRIN BREWERY COMPANY, LIMITED